Consumer-facing firms in the restaurant, leisure and hotel sectors could be worst affected by a 4.9% increase in the national living wage to £8.21 next April, as announced in last month’s Budget.

Canaccord Genuity Wealth Management has used its in-house research tool to identify listed businesses with the highest percentage of wages to sales, flagging the likes of Halfords (HFD), Pets at Home (PETS) and Mitchells & Butlers (MAB), among others.

‘A higher wage bill has to be funded somehow, and money could be shaved from directors’ stipends, research and development funds and it could also potentially hit shareholder dividends,’ says senior equities analyst Simon McGarry.

For example, budget bakery Greggs (GRG) could in theory face a 24% decline in its operating margin off the back of a 5% increase in wages, with a wage bill that stands at nearly 40% of total sales, says McGarry. (TS)

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